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Will the budget really stiimulate the housing market?

By Sarah Garrett

This year's budget announcement included news that the Stamp Duty 'holiday' will be extended until the end of the year, instead of just up until September, on property worth up to £175,000. Also an extra £80m will go towards a shared equity mortgage scheme. However, a whooping £500m will be injected into helping stalled housing projects get back on track and £100m will go to local authorities to build energy efficient homes.

OK, whilst it is debatable that the Stamp Duty Holiday is of some use to those trying to get on to the ladder, I have never understood how injecting money into the supply of more new build properties is ever going to help the property market recover. Yes, first time buyers can help a market recovery, but surely it is much more useful for them to buy a property from a vendor, rather than an empty property from a developer. By buying from a private seller they will usually stimulate a chain of buying and selling, allowing the seller to buy another property on the next rung of the ladder. Surely producing a greater supply of properties for sale on to the market is only going to drive prices down further.

The £500m set aside for developers, sounds like another rescue package to add to the HomeBuy Direct package worth £400m, which has recently been rolled out. HomeBuy Direct is an incentive to help first timers get on to the property ladder by giving buyers an interest free equity loan, which can be used as a deposit. Whilst this solves a problem for the buyer, don't be fooled, these loans are not available on all properties, but only  on certain empty new build properties that struggling developers have selected.

Whilst I agree that once the market does recover, if there isn't any building being resumed then we might have the problem of not enough supply of housing for our brimming population, this seems more a case of greedy developers, who made their money in the boom, now needing to be saved in the current crash.

If the Government really wanted to help first time buyers and stimulate the property market, they should put more funding into flexible schemes like MyChoice HomeBuy, where buyers can buy any property on the open market, including from private vendors by borrowing a deposit from the Government. This type of funding is available on a ‘first come, first served’ basis, and unfortunately in many regions has already run out.

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